By Hyunjoo Jin and Jake Spring
SEOUL/BEIJING (Reuters) - Bruised by anti-Korean sentiment in its biggest market and losing ground to local automakers, Hyundai Motor will open its first Chinese brand store, and may locally assemble its premium Genesis cars and accelerate the launch of a sport-utility vehicle (SUV), people familiar with the plans said.
The measures are aimed at rebooting the South Korean firm's branding in China, where many see Hyundai as a lower-end maker of city taxis.
Hyundai and its affiliate Kia Motors were not long ago ranked third among foreign car brands in China, but recent sales have been hit by a consumer backlash over South Korea's deployment of a U.S. anti-missile defense system which Beijing opposes.
Analysts say the diplomatic row masks broader problems for Hyundai/Kia in China: poor brand recognition and a model line-up struggling against local brands' cheaper SUVs.
"Hyundai has an in-between brand that doesn't have a clear identity in China, and there's the backdrop of poor China-Korea relations," said James Chao, Shanghai-based Asia-Pacific chief of consulting firm IHS Markit Automotive.
"Newly introduced SUVs should help, but they are late to the game."
Even before the missile systems row, Hyundai/Kia's China market share tumbled to 8.1 percent last year, the lowest in eight years. This year, it has slid further to 5 percent.
To help its identity crisis, Hyundai will in September open a brand experience center in Beijing's 798 Art District, a trendy hub of refurbished factory buildings. Hyundai has three similar centers in Seoul and one in Moscow.
"We're not going to show a real car. This space is only for focusing on brand building," Xu Jing, the Hyundai executive in charge of the project, told Reuters.
The center was planned before the recent political tensions, but its completion is now a key plank in Hyundai's efforts to regain a lost position in China as local automakers and European brands gain ground. Volvo-owner Geely and Great Wall Motor are also looking to move upmarket.
The branding store ventures into territory traditionally held by premium names such as Daimler's (DAIGn.DE) "Mercedes me" stores and BMW's (BMWG.DE) brand centers, already in China.
MAKING GENESIS
Hyundai is also considering using complete knock-down (CKD) kits shipped from South Korea to assemble Genesis cars in China - more than halving import tariffs to 10 percent - two people familiar with the matter said.
Building Genesis cars from kits in China would also prevent technology leaking to its local joint venture partner, BAIC (1958.HK), one of the people added.